Market News

Storm Alert Update – Harvey Makes Landfall (Again)

Harvey has officially made final landfall just West of Cameron, Louisiana, and will continue to bring heavy rain and flooding into East Texas and West Louisiana. Houston is finally seeing lighter rainfalls, but the storm continues raging on in Port Arthur and Lake Charles.

Harvey is finally picking up speed. The system had been caught between two bands of high pressure in the Western U.S. and near the Bahamas. Now that the Western pressure band is finally lightening, the storm is making more progress moving north. While the storm’s strength is related to wind-speed, its rainfall potential is tied to forward speed; the slower the storm moves, the more rain it can pour in one area. With the storm picking up speed, eastern Texas and Louisiana will hopefully be free of the torrential rain before the end of the week, allowing recovery to begin. So far over a dozen tornadoes have been reported, with more possible in Texas and Louisiana.

From a fuel standpoint, the most significant impact from the storm has been the shutdown of refineries. Crude production losses have fallen, and are now below a 1 MMbpd impact. The closure of ports in Lake Charles, Beaumont, and Port Arthur have slowed the import/export of products, but ultimately the 3.9 MMbpd of lost refining capacity has had the largest effect on prices. Goldman Sachs, citing the aftermath of Rita and Katrina, said that events like this can leave roughly 10% of the lost capacity down for months, taking almost half a million barrels of refined products off the market for the long-term.

Refineries are beginning to reopen in the area. Valero has announced plans to restart its Three Rivers site and its Corpus Christi plants. Other refineries may take longer to bring back online. The Magellan Pipeline, which runs north from Houston to Oklahoma, has reversed its direction of flow to allow refineries in Oklahoma to ship fuel into Dallas, providing more fuel for disaster response. The Magellan Pipeline receives most of its refined products from the Houston area and ships it north up to Minnesota, Denver, and Chicago. Shipping fuel from Oklahoma to Texas will take more product off the market for consumers north of Oklahoma, which could create supply tightness in the area.

The Colonial Pipeline announced last night that they cannot originate enough product in Houston to continue operations. Given that announcement, supply along the Colonial could be significantly delayed, creating the potential of shortages. Colonial believes the outages will be quickly rectified once the supply situation in Houston improves. Due to the announcement, Mansfield’s supply team has moved to Code Orange for the Southeast, up through Maryland. Already, supply has begun to experience some tightness in the Mississippi and Alabama areas.

Mansfield continues to work around the clock to help our customers fuel during the storm. If you have any questions or need to secure supply in the East Texas/West Louisiana area, please reach out to your sales rep or customer relationship manager for more information about ordering product. Please place orders 48-72 hours in advance whenever possible, to allow time to secure supply and freight during the shortage.

Code Red (Areas with significantly reduced or unavailable supply)

Dallas/Ft Worth, TX

Houston, TX

San Antonio, TX

Code Orange(Areas with limited supply availability)

Austin, TX

Buda, TX

Corpus Christi, TX

Edinburgh, TX

El Paso, TX

Harlingen, TX

Odessa, TX

Waco, TX

Lake Charles, LA

Code Yellow(Areas in the path of the storm)

Beaumont, TX

New Orleans, LA

Code Green(Fully operational)

Brownsville, TX

Tank Maintenance Alert: If your company has underground storage tanks in the impacted zones, make sure you’re familiar with the EPA’s safety recommendations for returning the tank to service. NACS Online has compiled the information you need to make sure that no further damage comes to your tank. Click here to learn more.

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